Wednesday, January 27, 2010

Sheer, Reich: State of the Union, Tonight's speech

The Sorry State of the Union

By Robert Scheer
Truthdig: January 26. 2010

The state of the union is just miserable, no matter how President Obama
sugarcoats it. He will claim that progress has been made in stabilizing the
markets, increasing national security and advancing toward meaningful health
care reform, but he will be wrong on all three counts.

What he will be right about is that none of these problems were originally
of his creation, and that the opposition party wants to exacerbate rather
than solve any of them - believing, as they do, in that destructive maxim of
desperate losers who find their salvation in the stumbles of the winners.

There is no doubt that Obama and his party represent the lesser evil, but it
is deeply disturbing to have to defend the leaders of our nation in those
terms. They were supposed to lead us to peace, but as the cables from the
U.S. ambassador to Afghanistan to Secretary of State Hillary Clinton,
printed in The New York Times on Monday, make absolutely clear, the
escalation in Afghanistan is tantamount to a disaster without end.
Ambassador Karl W. Eikenberry, a retired lieutenant general who was
previously the top American commander in Afghanistan, warned: "Sending
additional forces will delay the day when Afghans will take over, and make
it difficult, if not impossible, to bring our people home on a reasonable

Obama distracted progressives with a grand crusade for health care reform
that reasserted the fundamental fallacy of the previous health reform effort
of the Clinton years: Give the insurance companies a captive universal
market under the absurd illusion that we can control costs without
undermining their greed with a competitive government-run option.

The same is the case with the collapse of the economy, as Obama shamefully
continued the Bush administration's mugging of U.S. taxpayers by throwing
trillions of dollars at the Wall Street bandits who caused the financial
meltdown. Meanwhile, 7 million Americans have lost their jobs and 15 million
families owe more on their homes than they are worth.

Someday our president, whom I still regard as a decent and well-intentioned
politician, will have to confront the demons of that fatal opportunism that
led him to turn over the economy to the likes of Lawrence Summers and
Timothy Geithner, who can most charitably be described as hugely successful
Wall Street pimps. Obama knows of Summers' devilish role, during his time in
the Clinton administration, in pushing the radical deregulation of the
markets that the president blamed last week for our economic debacle. And he
is aware that the TARP inspector general is hot on Geithner's heels for his
role, as head of the New York Fed, in the funneling of $62 billion dollars
through AIG to Goldman Sachs and the other bonus payout alchemists.

But there is no indication from the carefully orchestrated leaks of his
State of the Union speech that Obama is truly set to reverse course.
Rhetoric about the "fat cat" bankers aside, his policies represent more of
the same. There will be some hokey gestures of support for the disappearing
middle class, but at the heart of his new budget proposal are cuts in needed
domestic spending for education, nutrition, air traffic control and just
about every other worthwhile domestic program. But there are no cuts for the
military budget that already makes up 60% of the federal government's
discretionary spending and is comparable to the total military budget for
the rest of the world's nations combined.

Budget director Peter Orszag, who is overseeing those cuts, is, like Summers
and Geithner, a disciple of former Clinton Treasury Secretary Robert Rubin,
whose radical deregulatory policies brought us to this point. Orszag's
freeze on domestic spending, projected for the rest of Obama's term, will
reduce the domestic budget to its lowest percentage in 50 years. That
portion of the discretionary budget is already so small that the proposed
cuts will save a scant $10 billion to $15 billion next year-chump change
compared to the $145 billion in bonuses for Wall Street's high rollers
dispensed after a year of massive national suffering that they engineered.

Shame on Obama for now telling us after wasting many trillions on Wall
Street and the Pentagon, that he will now seek to balance the biggest
indebtedness in U.S. history not by cutting from that greasy pork but rather
into the bone of our civic life, found in funding for schools and other
desperately needed social services. That is the opposite of a New Deal for
ordinary folks in need of their government's assistance more than at any
other time since the days of that last great Democratic president, Franklin
Delano Roosevelt. Will we ever have another?



Is the president panicking?

His spending freeze invokes memories of Clinton's shift right in '94. It's
worse because it could doom the recovery

By Robert Reich Jan. 26, 2010

President Obama today offered a set of proposals for helping America's
troubled middle class. All are sensible and worthwhile. But none will bring
jobs back. And Americans could be forgiven for wondering how the president
plans to enact any of these ideas anyway, when he can no longer muster 60
votes in the Senate.

The bigger news is Obama is planning a three-year budget freeze on a big
chunk of discretionary spending. Wall Street is delighted. But it means Main
Street is in worse trouble than ever.

A spending freeze will make it even harder to get jobs back because
government is the last spender around. Consumers have pulled back, investors
won't do much until they know consumers are out there, and exports are

In December 1994, Bill Clinton proposed a so-called middle-class bill of
rights including more tax credits for families with children, expanded
retirement accounts, and tax-deductible college tuition. Clinton had lost
his battle for healthcare reform. Even worse, by that time the Dems had lost
the House and Senate. Washington was riding a huge anti-incumbent wave.
Right-wing populists were the ascendancy, with Newt Gingrich and Fox News
leading the charge. Bill Clinton thought it desperately important to assure
Americans he was on their side.

Two months later, Clinton summoned Dick Morris to the White House to figure
out how Clinton could move to the right and better position himself for
reelection. The answer: Balance the budget.

But in 1994, Clinton's inconsistencies didn't much matter. The U.S. economy
was coming out of a recession. It was of no consequence that Clinton's jobs
proposals were small or that he moved to the right and whacked the budget,
because within a year the great American jobs machine was blasting away and
the middle class felt a lot better. Dick Morris was not responsible for
Clinton's reelection. Nor was Clinton's move to the right. What reelected
Bill Clinton in 1996 was a vigorous jobs recovery that was on the way to
happening anyway.

Today, though, there's no sign on the horizon of a vigorous recovery. Jobs
may be coming back a bit in the next months but the country has lost so many
(not to mention all those who have entered the workforce over the last two
years and still can't land a job) that it will be many years before the
middle class can relax. Furthermore, this recession isn't like other
recessions in recent memory. It has more to do with problems deep in the
structure of the American economy than with the ups and downs of the
business cycle.

Like Clinton's, Obama's package of middle-class benefits is small potatoes.
They're worthwhile but they pale relative to the size and scale of the
challenge America's middle class is now facing. Obama can no longer afford
to come up with lists of nice things to do. At the least, he's got to do two
very big and important things: 1) Enact a second stimulus. It should mainly
focus on bailing out state and local governments that are now cutting
services and raising taxes, and squeezing the middle class. This would be
the best way to reinvigorate the economy quickly. 2) Help distressed
homeowners by allowing them to include their mortgage debt in personal
bankruptcy -- which will give them far more bargaining leverage with
mortgage lenders. (Wall Street hates this.)

Yet instead of moving in this direction, Obama is moving in the opposite
one. His three-year freeze on a large portion of discretionary spending will
make it impossible for him to do much of anything for the middle class that's
important. Chalk up another win for Wall Street, another loss for Main.

-- By Robert Reich

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